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Copy Trading Scams: How to Avoid them?

January, 8th 2024

Are you tired of falling into the same trap in copy trading scams again and over? Scammers lurk all over the Copy Trade world, waiting to take advantage of ignorant investors. But don't worry! This guide delivers you with the knowledge and tools you need to discern these scams before you get your hard-earned money stolen. Learn basic knowledge, investigate platforms, discover warning indicators, and authenticate traders to avoid the dangers of copy trade. Now, let's discover how to protect ourselves from this mischief. Do not forget that knowledge is a force, and if you have the right information, you can confidently navigate the world of copy trading scams and avoid the danger of waiting.

Copy Trading Scams

Copy Trading: Let’s Recap

Let's refresh your head a little before stepping on the dark side of the copy trade. Let's say that professional chefs perform first-class cuisine in the cooking class. Copy trades work in a similar concept in that they imitate the trading of expert traders. It's as if the genius traders are next to each other, whispering their ideas and methods in their ears.

Is copy trading a scam?

Copy trading is not a fraud because traders can benefit from imitating skilled traders. However, some authorities have pointed out that brokers do not always disclose a full list of important characteristics of duplicate transactions to investors. Traders must choose a platform that is regulated in one of the following developed countries: the UK (FCA), Cyprus (CySec), and Australia (ASIC).

Copy Trading Scams

Ponzi Schemes:

In the Ponzi Schemes Course of copy trading scams, the operator promises investors a big return with little risk. Instead of generating real profits, these rewards are paid to previous investors with funds from new investors, making them seem profitable. Since there is no actual asset or production business, this plan relies on the constant influx of new investors to continue the remuneration. If the pool of new investors shrinks, the plan will eventually collapse, and many investors will suffer huge financial losses.

Pump and dump:

Pump and dump fraud raises the price of stocks and cryptocurrencies by causing fraudsters to shed false information and rumors. After the price rises, they make a profit and sell the stock, leaving assets that are not valuable to other investors. This kind of scam is very common in the Bitcoin area.

Fake Trading Systems:

Fraudsters may sell automated trading systems or robots that claim to yield reliable returns. Such systems often need to be purchased in advance, but they rarely fulfill their promises and can result in significant losses. Such fake trading bots and systems are aimed at both beginners and veteran traders.

Fake Trading Advice Services:

Fake trading advisory services are misleading ways in which individuals or organizations appear as respected trading advisors or money managers. They may promise individual trading advice and offer to manage actual funds and trading orders on behalf of the victim so that the customer can achieve great benefits. However, since these advice services are sometimes deceptive, require exorbitant fees, are of low quality, or are perfectly structured, consumers will make false decisions that induce loss.

Signal Sales Fraud:

Fraudsters pay for and provide accurate and successful trading signals, such as insider knowledge, secret tactics, or automated systems that provide significant benefits. However, these signals may be meaningless or harmful, and inadvertent traders will suffer losses. Fraudsters frequently employ compelling marketing strategies and fabricated testimonials to lure victims into fraud.

Binary Options Fraud:

Binary options are high-risk financial products that investors bet on the price movements of assets over a period of time. Some binary options systems steal money from investors by manipulating pricing and rejecting withdrawals. Regulators in many countries have cracked down on binary options fraud.

Phishing and identity theft:

Phishing emails and websites are intended to trick traders into disclosing personal and financial information. When a scammer accesses this information, he can steal your ID or work a scam in your name.

Common Psychological Tactics Used by Scammers

Trading fraudsters may target you, whether you are a day trader, trying to maintain a long position, trading FX, or trading based on trading signals. Be aware of the various ways in which such fraudsters come into contact because knowledge is the greatest defense.

Greed:

Many trading scams feed on people's desire to earn big as soon as possible. It makes it easy to get scammed by expecting a thousand dollars

Fear of Missing (FOMO):

Fraudsters can incite urgency by suggesting that investment opportunities are only available for a short period of time and that others have already benefited from it. This appeals to the fear of losing prospective rewards

Credit:

Fraudsters may make great efforts to create trust. To make it appear credible, they may use false testimonials, fraudulent recommendations from celebrities and experts, or make compelling websites and papers.

Social proof:

Fraudsters may imply that many others have already invested and profited, leading potential victims to jump at ease.

Lack of expertise:

Many victims of transaction fraud have little or no knowledge of financial markets. Fraudsters utilize this by providing a simplified explanation that does not involve danger and promising prompt rewards.

Your Shield Against Copy Trading Scammers

But don't worry about copy trading scams, we're not going to throw you naked into the lion's nest. Here is a set of tools to stop fraudsters trafficking copies:

Unleash the inner Sherlock:

Channel your inner investigators and conduct extensive investigations. Examine traders' experience, achievements, and reputation. If you are an authentic trading expert, you have a proven track record.

Pay attention to the bait of Picapica:

If you are sold a fantasy that seems too wonderful, act carefully. True traders recognize that risk and reward are two sides of a unity. There is no magic wand that guarantees only winning.

Regulatory Radar:

Reputable copy trading platforms act ethically in accordance with financial authority regulations. Before you dig in, make sure that the platform you are thinking of has all the right permissions. Scammers usually avoid inspections.

The toughness is Red Light:

When a trader encourages you to invest now or has an "exclusive" chance, it is time to pull your hand. Legitimate vendors respect your decision-making process and do not use high-pressure sales methods.

Believe in your intuition:

If you think something is wrong, do not deny your intuition. Listen to your intuition, and if you feel something wrong, leave without fear.

Verifying the Traders before copy trading

By conducting extensive research and analysis, traders can be checked. It is an important part of decreasing copy trading scams. When evaluating a trader's performance, consider the following factors:

Performance history: Find traders with consistent trading results over a long period of time. Examine past trading patterns and determine the likelihood of profitability on a regular basis.
Trading Frequency and Volume: Evaluate traders' trading frequency and volume. If the trading frequency is high, it may be a more active and experienced trader, but if the volume of transactions is large, it may reflect confidence in the tactic.
Risk management: It is important to consider risk management when checking traders. Find traders with excellent risk management tactics, such as setting up loss orders and careful management of position sizes. Traders who are keen on risk management are more likely to defend your assets.

Top tips for Copy trading

Never reply to an email requesting confirmation of bank or credit card information. No legitimate organization will make such a request. The same applies when you are asked to provide this information by phone.
When purchasing products online, make sure payment procedures are secure (indicated by the URL https://, padlock mark). Check if the company has an address and telephone number. It decreases copy trading scams.
Investigate the companies of the business partners. Use the company register to see if the company exists and who is behind the company.
If you sign up immediately, you will not be fooled by a refrigeration phone that promises great offers and immediate benefits. Legitimate companies give you plenty of time to conduct surveys.
If you think you've been fooled, please contact the police. If you have any information about your bank account, please contact the bank immediately and stop the account. Unauthorized purchases of credit cards may be canceled.

Conclusion

In summary, understanding basic knowledge, properly investigating platforms, identifying warning indicators, and authenticating traders are critical stages of avoiding copy trading scams. By adopting these safety measures, investors can avoid becoming victims of fraud and make safer and more reliable transactions. In order to protect your own funds, you need to be careful when participating in the copy trade.